Re TriAusMin Ltd (No 2)

Case [2014] FCA 833

FEDERAL COURT OF AUSTRALIA

TriAusMin Limited, in the matter of TriAusMin Limited (No 2) [2014] FCA 833

Citation: TriAusMin Limited, in the matter of TriAusMin Limited (No 2) [2014] FCA 833
Parties: TRIAUSMIN LIMITED (ACN 062 002 475)
File number(s): NSD 486 of 2014
Judge(s): FARRELL J
Date of judgment: 4 August 2014
Catchwords: CORPORATIONS – scheme of arrangement – approval of scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) – irregularities in despatch of Scheme Booklet – material sent to shareholders without Court approval – low voter turnout
Legislation: Corporations Act 2001 (Cth)
Securities Act 1933 (USA)  
Cases cited: Re Alchemia Limited (No 2) [2012] FCA 1136
Re Auzex Resources Limited(No 2) [2012] QSC 101
Re Avoca Resources Limited [2011] FCA 208
Re British Aviation Insurance Co Ltd [2006] 1 BCLC 665
Re BTR plc [2000] 1 BCLC 740
Re Cape plc [2006] EWHC 1446
Re Centro Retail Limited [2011] NSWSC 1321
Re Cortona Resources Limited (No 2) [2013] FCA 302
Re Osiris Insurance Ltd [1999] 1 BCLC 182
Re Professional Investment Holdings Ltd (No 2) [2010] FCA 1336
Re Redcape Property Fund Limited and The Trust Company (RE Services) Limited [2012] NSWSC 486
Re Seven Network Limited (No 3) (2010) 267 ALR 583
Re Simavita Holdings Limited [2013] FCA 1274
Re TriAusMin Limited [2014] FCA 611
Re Uniq plc [2011] EWHC 749
Date of hearing: 4 August 2014
Date of last submissions: 4 August 2014
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 24
Counsel for the Plaintiff: Mr RM Foreman
Solicitor for the Plaintiff: Addisons Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 486 of 2014

IN THE MATTER OF TRIAUSMIN LIMITED (ACN 062 002 475)

BETWEEN:

TRIAUSMIN LIMITED (ACN 062 002 475)
Plaintiff

JUDGE:

FARRELL J

DATE OF ORDER:

4 AUGUST 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the plaintiff, TriAusMin Limited (ACN 062 002 475) (TriAusMin), and its shareholders (Scheme), being in the form contained in Annexure D of the Scheme Booklet which was registered with the Australian Securities and Investments Commission on 6 June 2014 and which is Exhibit 1 in this proceedings, be approved.

2.Pursuant to s 411(12) of the Act, TriAusMin be exempted from compliance with s 411(11) of the Act in relation to the Scheme.

3.These orders be entered forthwith.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 486 of 2014

IN THE MATTER OF TRIAUSMIN LIMITED (ACN 062 002 475)

BETWEEN:

TRIAUSMIN LIMITED (ACN 062 002 475)
Plaintiff

JUDGE:

FARRELL J

DATE:

4 AUGUST 2014

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. This is an application by the plaintiff (TRO) for orders under s 411(4)(b) of the Corporations Act 2001 (Cth) (

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AGLC
Re TriAusMin Ltd (No 2) [2014] FCA 833
Case
[2014] FCA 833
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Re TriAusMin Ltd (No 2) involved an application by TriAusMin Ltd (TRO) for court approval of a scheme of arrangement whereby TRO shareholders would exchange their shares for shares in Heron Resources Limited. The scheme was proposed to facilitate a corporate restructuring and the shareholders were to receive one share in Heron for every 2.33 TRO shares held. The legal issues central to the case included whether the scheme was fair to all shareholders, whether the necessary procedural requirements were met, and whether the exemption from registration under the US Securities Act 1933 was validly applied.

The court considered several factors in determining the fairness of the scheme, including the expert valuation of the shares, the process followed in convening and conducting the scheme meeting, and the notice given to shareholders. The court emphasised that it did not act as a valuer but had taken the sworn independent valuation into account. It was also noted that the scheme meeting was conducted in accordance with the court's prior orders, with proper notice given to shareholders and an opportunity for them to appear and be heard. The court found that the scheme was fair and reasonable and that all procedural requirements had been met.

The Federal Court granted the orders sought by TRO, approving the scheme of arrangement. The court was satisfied that the exemption from registration requirements under the US Securities Act was properly applied, and that the scheme was fair to the shareholders. The orders approved the scheme and allowed for its implementation, subject to compliance with any further conditions set out in the court's orders. The court's decision provided clarity on the procedural and substantive requirements for approving such schemes and reinforced the role of the court in ensuring fairness to all shareholders.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

TRO gave notice at the first court hearing that TRO and Heron propose to rely on the exemption from registration requirements under the Securities Act 1933 (USA) provided by s 3(a)(10). As I have noted previously in Re Simavita Holdings Limited [2013] FCA 1274 at [51], it has become relatively common for the Court to make certain statements in reasons for this purpose. Accordingly, I make the following statements:a.The Scheme contemplates the receipt of Heron shares as consideration for the transfer of TRO shares;b.The Court had been advised before commencement of the second court hearing to approve the Scheme of the intention to rely on the s 3(a)(10) exemption on the basis of the Court’s approval of the Scheme;c.The Court does not act as a valuer. The Court has been informed of the value of TRO shares and the value of the Heron shares to be received as consideration for the transfer of TRO shares: see TriAusMin at [12]-[13]. The valuation was prepared by an expert which the Court has been advised is independent of TRO and Heron and it is a sworn valuation. The Court has taken this evidence into account in determining whether the Scheme is fair and should be approved;d.The Court held a hearing to consider the fairness and reasonableness of the proposed Scheme;e.That hearing was open to the public and each TRO shareholder to whom Heron shares are to be issued had standing to appear;f.Notice of the date of the second court hearing was included in the Scheme Booklet sent to all shareholders of TRO before the proposal was considered by the Scheme Meeting. The date and time of the second court hearing was advertised in a daily newspaper circulating throughout Australia; andg.There was no appearance by any shareholder.CONCLUSION I am satisfied that all formal matters have been addressed and nothing has been brought to my attention which would prevent the Court from making the orders sought by TRO.

Ratio Decidendi

Legal Principle Established

This is an application by the plaintiff (TRO) for orders under s 411(4)(b) of the Corporations Act 2001 (Cth) (Corporations Act) approving a scheme of arrangement between TRO and its members pursuant to which TRO shareholders will receive one share in Heron Resources Limited (Heron) for every 2.33 TRO shares held (Scheme). TRO also seeks an order under s 411 (12) that s 411(11) not apply. On 6 June 2014, I made orders for despatch of a Scheme Booklet and to convene a Scheme Meeting on 28 July 2014: see Re TriAusMin Limited [2014] FCA 611 (TriAusMin). Words defined in those reasons and in the Scheme Booklet bear the same meaning in these reasons unless otherwise indicated. All references to section numbers refer to the Corporations Act unless otherwise specified. Dr James Gill, Chairman of TRO, gave evidence that:a.He acted as Chairman of the Scheme Meeting, which was held at the time and place specified in my orders of 6 June 2014;b.He advised the meeting that the no Superior Proposal had been received;c.The results of the poll were that the resolution approving the Scheme was passed by a majority of 99.93% comprising 132,932,936 votes for and 93,500 votes against the Scheme (1500 abstaining). Of the shareholders who attended and voted at the meeting in person or by proxy, 158 voted for and two voted against the resolution. The Australian Securities & Investments Commission (ASIC) provided its “usual letter” under s 411(17)(b) on 4 August 2014. Certificates dated 4 August 2014 executed on behalf of TRO and Heron were tendered. The Certificates are to the effect that the conditions of the Scheme (other than Court approval and lodgement of orders under s 411(4)(b) with ASIC) have been satisfied or waived. I am satisfied, subject to the three matters which were drawn to my attention and discussed below, that the Scheme Booklets were despatched and the Scheme Meeting was held in accordance with my orders dated 6 June 2014. I am satisfied TRO is a Part 5.1 body and that the resolution was passed by the majority of shareholders attending and voting at the Scheme Meeting required to satisfy s 411(4)(a)(ii). The following affidavits were read in support of these conclusions: a.Dr James Gill, Chairman of TRO, affirmed on 29 July 2014. The affidavit related to the conduct of the Scheme Meeting; b.Ms Mary Huang, a solicitor employed by Addisons, the Australian lawyers for TRO, affirmed on 30 July 2014. The affidavit related to lodgement of documents with ASIC; c.Mr Dennis Peterson, a principal of Peterson Law Professional Corporation, the Canadian legal advisors to TRO, sworn on 31 July 2014. The affidavit related to Canadian practice with respect to communications with shareholders; d.Mr David Gardos, a solicitor employed by Peterson Law Professional Corporation, sworn on 31 July 2014. The affidavit related to communications with the Toronto Stock Exchange (TSX); e.Mr David Parkinson, an employee of Boardroom Pty Limited, affirmed on 31 July 2014. Boardroom Pty Limited provides share registry services to TRO in Australia and was responsible for proxy collation and vote tallying services at the Scheme Meeting. Mr Parkinson was returning officer at the Scheme Meeting;f.Mr Steven Hoy of Budget Mailing Services Pty Ltd sworn on 1 August 2014. This affidavit relates to mailing of the Scheme Booklet to Australian and foreign shareholders outside North America; g.Mr Simon Smith, company secretary and chief financial officer of TRO, affirmed on 1 August 2014. The affidavit relates to despatch of the Scheme Booklets and related material, notice to the auditor, appointment of Boardroom Pty Ltd, shareholder turnout, the execution of option cancellation deeds to satisfy a condition precedent to the Scheme, publication of notice of the second court hearing in the Australian on 11 July 2014 in accordance with the orders made on 6 June 2014 and the fact that he has not received notice of anyone’s intention to appear at the second court hearing in relation to the Scheme. This affidavit annexed copies of affidavits sworn on 30 June 2014 and 21 July 2014 by Ms Lori Winchester of Equity Financial Trust Company, which performed mailing services to Canadian shareholders and collated proxies. It also annexed a copy of an affidavit sworn on 11 July 2014 by Mr Rasheed Mohammed in relation to mailing of material to shareholders. Mr Peterson gave evidence that the affidavits of Ms Winchester and Mr Mohammed are in a form which would be acceptable to a Canadian court; andh.Ms Li-Jean Chew, of Addisons, affirmed on 4 August 2014. Ms Chew gave evidence about her communications with ASIC.